Archive for February, 2010|Monthly archive page

Many corruption scandals stem from the high cost of politics, and unrealistically tight campaign-finance rules (The Economist).

Mercosur, South America’s co-operative trade organization, and the EU could forge an historic trade alliance as early as May of this year according to some sources. However there remains a key issue confronting the two parties: agricultural subsidies that the developed world pays to domestic producers, inhibiting the ability of other nations to compete in an open market (Rio Times).

ECONOMY

Brazil’s central bank is prepared to take unpopular measures to maintain stability in the financial system, the bank’s president Henrique Meirelles said, further preparing the ground for a rate hike (Reuters).

President Lula said his government will expand a project to build low- income homes for workers, bringing the total number of new homes planned to 2 million, up from an original target of 1 million (Bloomberg).

Brazil may create a company to oversee boosting fertilizer production as it seeks to become self-sufficient in potash, phosphate and nitrogen-based raw materials by 2020 (Bloomberg).

Further evidence that the Brazilian economy is continuing on an upward trajectory was provided recently with the release by independent consultants Brand Finance of its list of “The 500 Most Valuable Brand Names in the World.” In 2009 there were only six Brazilian brands appearing on this list, this year it has already jumped up to an impressive fifteen (Rio Times).

BUSINESS

Brazil’s No. 3 steelmaker CSN aims to increase sales in 2010 by one third to 5.5 million tonnes, up from last year’s 4.1 million tonnes (Reuters).

Brazil’s largest poultry exporter, Brazil Foods said export sales revenues plummeted in 2009 and it expects recovery to be slow (Reuters).

BANKING & FINANCE

JPMorgan Chase & Co, the second largest U.S. lender by assets, is in talks to buy a stake in Brazilian hedge fund and private equity firm Gavea (Reuters).

Banco do Brasil, Latin America’s largest lender, said it is exploring ways to raise capital including a possible share sale (Reuters).

OIL

Petrobras said it had made two separate discoveries of oil in the Campos Basin near Brazil’s coast with recoverable reserves of 40 million and 25 million barrels (Reuters).

A bill being debated gives Petrobras rights to 5 billion barrels of oil in exchange for giving the government new stock as part of a broader share offering estimated at as much as $50 billion by Credit Suisse (Bloomberg).

TRAVEL

Hol, Brazil’s second-largest airline, forecast domestic demand will increase as much as 18 percent this year as economic growth accelerates (Bloomberg).

REAL ESTATE

Brazil may be on the cusp of a much-discussed real estate boom, but in one corner of Zona Sul where the price per square meter is higher than anywhere in the country, there are relatively few new developments underway. Leblon may be lacking the tidal wave of jackhammers, building crews and construction cranes found in Barra da Tijuca, but there are changes underway in Rio’s luxury beach-side (Rio Times).

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Dilma Rousseff, President Luiz Inacio Lula da Silva’s chief of staff, vowed to continue Brazil’s investor-friendly economic policies if she won the Oct. 3 presidential race as the ruling Workers’ Party candidate (Reuters).

Rousseff is believed to favor an expanded role for state firms in the economy, a position that became more popular during the global financial crisis. This could entail reducing private sector participation in industries such as banking, oil and gas, and utilities (Reuters).

Brazil’s President Luiz Inacio Lula da Silva has no plans to run for office in 2014 and says his chosen successor has the right to stand for re-election should she win this October’s poll, O Estado de S. Paulo newspaper reported (Reuters).

Sao Paulo state Governor Jose Serra, the principal opposition candidate in Brazil’s Oct. 3 presidential election, holds a large but narrowing lead over the ruling party contender with 36 percent of voter intention (down two percentage points from November. President Luiz Inacio Lula da Silva’s chosen candidate, his chief of staff Dilma Rousseff, jumped to 25 percent from 17 percent in November (Reuters).

Brazil has told the U.S. and France that it doesn’t support tougher UN sanctions on Iran and will continue, over the objections of the Obama administration, to seek more trade with the Islamic government (Bloomberg).

ECONOMY

Brazil’s presidential election in October looks less risky to investors than any other in the last quarter of a century and the economy has bounced back after a brief recession due to the global financial crisis, but there are still investment risks to watch in Brazil this year. Find those risks at Reuters.

Brazil created a record number of jobs or the month of January, increasing the odds that policy makers may start raising the benchmark interest rate as early as next month to keep inflation in check (Bloomberg).

ETHANOL

Brazilian ethanol and sugar company ETH has agreed to take over smaller, debt-laden rival Brenco to create one of the world’s largest ethanol producers, the latest in a series of large acquisitions in the sector (Reuters).

BANKING

State development bank BNDES, Brazil’s main source of long-term corporate credit, expects private banks to increase lending this year, taking up some of the slack they left at the height of the worst meltdown in credit markets in decades, its president said (Reuters).

BNDES may lend about 14 billion reais ($7.5 billion) through 2013 to support investment in the petrochemicals industry, O Estado de S. Paulo reported, without saying where it got the information (Bloomberg).

REAL ESTATE

BR Properties and its shareholders plan to raise up to 1.71 billion reais ($914 million) by selling shares of the Brazilian real estate developer (Reuters).

Since the announcement of the 2016 Olympics here in Rio de Janeiro, there has been much speculation the effect such news would bring about to the local real estate market. This speculation has been especially buzzing in Barra de Tijuca, the neighborhood where the majority of the events will take place (Rio Times).

AGRICULTURE

Brazil and Argentina, the biggest soybean producers after the U.S., may harvest as much as a combined 120 million metric tons of the oilseed this year as rain boosts yields, Cargill Inc. said (Bloomberg).

OIL

Petrobras may issue $75 billion of shares in what would be the world’s biggest stock sale ever, Folha de S. Paulo reported (Bloomberg).

PORTS

Brazil’s government is planning to auction licenses for about 100 port terminals whose contracts are due to expire by 2013, O Estado de S. Paulo reported, citing Fernando Fialho, general director of the country’s water transportation regulator (Bloomberg).

RIO

Set up in 2005 by Dutch entrepreneurs Sebas Van den Ende and Lucille Holtel as a consultancy firm, Real Alliance has grown in five short years to become responsible for some of the largest trade shows of their kind in Latin America, and with huge construction and development plans across Brazil during the next decade, they are well placed to reap the benefit of this rapidly expanding sector with two major events this year (Rio Times).

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Brazilian central bank president Henrique Meirelles could forgo running for a seat in the Senate, Planning Minister Paulo Bernardo said, in the latest signal that Meirelles could remain at the helm of monetary policy through the end of his term in December (Reuters).

President Lula da Silva’s party pledged to keep in place the country’s current monetary, fiscal and exchange rate policies should Cabinet chief Dilma Rousseff win the October election (Bloomberg).

Brazil’s Supreme Court decided that Federal District Governor Jose Roberto Arruda may be kept in custody, turning down his request for release. Arruda was placed under arrest yesterday while corruption allegations against him are investigated. He has taken a leave of absence, putting Vice Governor Paulo Octavio in charge of the country’s capital district (Bloomberg).

Brazil will be able to break U.S. patents or suspend remittances from royalties on intellectual property under a decree issued today to allow retaliation against the U.S. in a dispute over farm subsidies (Bloomberg).

ECONOMY

The Central Bank now sees signs of overheating. Inflation, at 0.75%, was surprisingly strong in January, pushing the rate for the past 12 months to 4.6%. The minutes of the latest meeting of the bank’s monetary-policy committee suggest that it will raise its benchmark interest rate in March or April, for the first time since September 2008 (The Economist).

OIL

Brazil’s state-oil company Petrobras said it maintained its estimate for recoverable oil reserves in its Tupi field off Sao Paulo state’s coast at 5 billion to 8 billion barrels (Reuters).

Brazil’s Congress is “unlikely” to approve by April a package of oil legislation that includes a share capitalization of Petrobras, Bank of America said in a note to clients (Bloomberg).

BUSINESS

The battle between Camargo, Votorantim and CSN for control of Portuguese cementmaker Cimpor is still raging. CSN raised its bid but offered to buy a smaller stake, in a change of tack aimed at luring shareholder approval for its bid (Reuters).

Vale, Eletrobras and three other Brazilian companies have teamed up to bid for the rights to build the Belo Monte hydroelectric dam in Brazil’s Amazon region (Bloomberg).

Sao Paulo’s government has abandoned a plan to sell Cia. Energetica de Sao Paulo, Folha de S. Paulo reported, citing Vilson Daniel Christofari, the state-controlled utility’s chief executive officer, who was appointed in January (Bloomberg).

Brazil may invest up to 20 billion reais ($10.8 billion) to revive Telebras, allowing the state-owned phone company to sell broadband service for half the price charged by local carriers (Bloomberg).

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Sao Paulo Governor Serra, the front-runner in Brazil’s coming presidential contest, has done a decent job running its biggest state. But to keep his lead he must get campaigning. Read the full article in The Economist.

Just weeks away from the beginning of what will undoubtedly prove to be months of fierce presidential campaigning, José Serra, current governor of Sao Paulo, remains in a strong position. Despite not having formalized his candidacy, Serra continues to come out on top in both simulated and spontaneous polls (Rio Times).

With recent developments putting the Marvelous City center-stage during the next decade, both in Brazil and the world, the state government elections have taken on a higher profile. Currently, it seems Rio runoffs will be shaped as much by national party politics, as by regional polling (Rio Times).

Brazil’s justice minister became the first of several cabinet members to resign so he could run in this year’s election, raising the prospect that President Luiz Inacio Lula da Silva’s government could lose steam well before its term ends in December (Reuters).

Dilma Rousseff should be favored to win this year’s presidential election over likely opposition candidate Sao Paulo Governor Jose Serra, the Eurasia Group said. The “election certainly promises to be very competitive, but President Luiz Inacio Lula da Silva’s candidate, Dilma Rousseff, should be considered favored to win” against Serra, the Washington-based political risk research company, wrote (Bloomberg).

ECONOMY

Automobile output in Brazil jumped in January from a year earlier, an indication that government-sponsored incentives helped propel domestic demand for new cars, the national automakers’ association Anfavea said (Reuters).

Brazilian policy makers said that rising domestic demand is reducing slack in the economy and increasing the risk that inflation may quicken, according to the minutes of their last meeting (Bloomberg).

BANKING & FINANCE

Brazil and Argentina called for reforms at the Inter-American Development Bank, saying the regional lender had failed to understand the needs of Latin America during the global financial crisis (Reuters).

BlackRock, the world’s largest independent money manager, sees Brazil’s benchmark Bovespa index rising to 77,000 by the end of the first quarter on rising demand for exchange-traded funds, a top executive said (Reuters).

Banco do Brasil, Latin America’s largest bank by assets, said its fourth-quarter earnings would receive a boost of 1.6 billion reais ($848.8 million) after it recalculated payments to an employment pension plan (Reuters).

BIOFUELS

The $12 billion joint venture unveiled on February 1st by Shell and Cosan, a big Brazilian producer of ethanol, marks something of a reversal. Read why in The Economist.

Brazil’s ethanol industry, which invested heavily to boost output of the cane-based biofuel, is counting on a tie-up between sugar and ethanol producer Cosan and Royal Dutch Shell Plc to revive its prospects after exports fell short of expectations (Reuters).

Brazil will reduce its Cide tax on gasoline at the pump, Brazil’s finance minister, Guido Mantega, said. The measure, which will last from Feb. 5 through April 30, is aimed at offsetting the effects of the reduction of ethanol mix in gasoline (Reuters).

Mergers and acquisitions have been gaining momentum in Brazil’s sugar and ethanol sector since the 2008 credit crisis overwhelmed mills laden with too much debt. Read the full list at Reuters.

Raw sugar prices probably will decline from a 29-year high this year as a “huge increase” in production driven mainly by Brazil may balance the market, according to German research company F.O. Licht (Bloomberg).

DEFENCE

France is confident that Brazil will choose French-made Rafale jets as its next generation fighter planes, trade minister Anne-Marie Idrac said (Reuters).

RIO

The recent attention on Rio’s metro subway system has citizens wondering whether the proposed extension to Barra will be ready in time for the 2016 Olympic Games. Nevertheless, progress is being made and seemingly ahead of schedule; the new station in Ipanema, scheduled to open in 2010, was inaugurated in last December, a sign that the metro is well on its way to meeting the 2016 target. Read the full story in the Rio Times.

BUSINESS

Votorantim Cimentos said it reached a deal to buy a stake in its Portuguese counterpart Cimpor (Reuters).

Brazilian machine tool maker Industrias Romi SA submitted an unsolicited all-cash offer to buy Hardinge Inc of New York for $90 million, saying it has been rebuffed by the U.S. precision metal-cutting machine company’s management (Reuters).

Brazil’s anti-trust authority imposed restrictions on Grupo Pao de Acucar from immediately merging its operations with two major retailers it acquired in 2009 (Reuters).

Giant petrochemicals producer Braskem is looking to make more acquisitions in the U.S. market, the company’s chief financial officer said, after the company announced that it would buy a unit of Sunoco Inc (Reuters).

OIL & GAS

Petrobras may raise as much as $30 billion from minority investors in a planned share sale this year. “We expect to raise between $15 billion to $30 billion from the minority shareholders,” Almir Barbassa, chief financial officer of the Rio de Janeiro-based oil producer, told the press while opening a new office in Rotterdam (Bloomberg).

Keppel Corp, the world’s largest oil rig builder, said it has won a $1 billion contract with a joint venture partner to build and operate a rig platform in Brazillian waters (Reuters).

Singapore’s Sembcorp Marine, the world’s second largest offshore oil rig builder, said it has bought land for a new shipyard in Brazil. The freehold site of 825,000 square metres is near the Espirito Santo Basin, which is one of the country’s recently discovered offshore giant pre-salt oil basins (Reuters).

Brazilian oil start-up OGX said it estimated recoverable oil reserves from its OGX-3 well at 500 million to 900 million barrels (Reuters). OGX also said it estimated recoverable oil reserves from its OGX-4 well at 100 million to 200 million barrels (Reuters).

BP Plc said it is looking for oil exploration opportunities in Brazil, where some of the biggest finds in decades have been made in recent years, but downplayed speculation it was eyeing a tie-up with players active in the area (Reuters).

Cosan, the world’s largest maker of ethanol from sugar cane, may bid for ENI Spa’s Brazilian natural-gas distribution assets (Bloomberg).

ENERGY

Brazil’s government has granted an environmental license for the construction of a controversial hydroelectric dam in the heart of the Amazon rainforest, the Environment Minister said (Reuters).

Brazil’s infrastructure is in “terrible shape” and the country isn’t saving and investing enough, holding back growth, said former central bank President Arminio Fraga. Fraga, who is now chairman of the BM&FBovespa SA exchange, said he’s concerned that foreign investors “think Brazil is perfect,” which may create overconfidence in the country (Bloomberg).

Brazil will hold an auction on May 2 for contractors to build a $17.4 billion high-speed rail to link the cities of Sao Paulo, Rio de Janeiro and Campinas, the president’s chief of staff, Dilma Rousseff, said (Reuters).

Shares in Hoteis Othon SA, a Rio de Janeiro- based chain of hotels, jumped to the highest in more than two years after the government said it would provide 1 billion reais in financing to prepare hotels for the 2014 World Cup. Brazil’s national development bank, known as BNDES, opened up financing to expand and update the country’s hotel infrastructure, Folha de S. Paulo reported (Bloomberg).